The qui tam lawyers at my firm represent corporate whistleblowers in lawsuits under the False Claims Act involving fraud and other illegal schemes.
Under the Federal False Claims Act (FCA) and the Maryland False Claims Act (MFCA), anyone with direct knowledge of corporate fraud that is costing the government money can file a lawsuit against and earn a percentage of any money recovered.
These types of whistleblower lawsuits by private citizens on behalf of the government are known as “qui tam” lawsuits.
The Federal False Claims Act
The False Claims Act is a federal law that dates back to the civil war era when the federal government was attempting to curtail rampant fraud by private contractors supplying the U.S. Army. The FCA states that anyone who defrauds the federal government can be held liable for 3 times the amount of loss caused by that fraud as well as hefty fines.
In the 1980s, the FCA was amended to include the qui tam or whistleblower provisions. This new amendment to the FCA basically gave private citizens the ability and incentive to become independent whistleblowers by bringing fraud cases on behalf the government.
Under the qui tam provisions, lawsuits to collect statutory damages and penalties can be brought by a private citizen, known as a qui tam relator). Once your lawsuit is filed by a private lawyer, the federal government let the private lawyer run with the case or it can take over the case themselves.
Either way, whistleblower lawsuits can be lucrative for the whistleblower. If the qui tam lawsuit is successful, the whistleblower plaintiff gets rewarded with a percentage of any money that is recovered. If the government takes over the qui tam action, the whistleblower plaintiff gets 15-25%, plus reasonable attorneys’ fees. If the federal government does not intervene, the whistleblower plaintiff is entitled to 30% plus attorneys’ fees.
Until recently, the FCA was primarily limited to the military, direct government contractors, and federal employees. In 2009, however, the scope of the FCA was greatly expanded to include any company that receives money from the federal government. This meant that healthcare facilities such as hospitals and nursing homes could be subject to the FCA if they received government funds through Medicare or Medicaid reimbursement.
False Claims Act Language
The False Claim Act is implicated when a person “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1)(A). A violation may also occur when a person “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” § 3729(a)(1)(B). The term “material” is defined as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” § 3729(b)(4). The Acts defines “knowingly” to mean that a “a person, with respect to information,” either “has actual knowledge of the information,” “acts in deliberate ignorance of the truth or falsity of the information,” or “acts in reckless disregard of *3 the truth or falsity of the information.” § 3729(b)(1)(A). This is not a criminal statute. So critically important to whistleblowers and often ignored by defense lawyers, there is no requirement of proof of specific intent to defraud is required.
Maryland’s False Health Claims Act
Maryland (and all other states) has its own state-level versions of the False Claims Act. The Maryland False Health Claims Act (MFHCA) was enacted in 2009 and it covers fraudulent activity in the healthcare industry. The Maryland False Clams Act (MFCA) was enacted in 2015 and it covers general fraud against the state. Both the MFHCA and MFCA basically mirror the federal FCA and work exactly the same way.
Maryland allows individuals with direct knowledge to become whistleblowers and bring qui tam actions, just like the federal FCA system. The main difference between the Maryland and the federal false claims process is that in the Maryland system, the state (through the Attorney General) must accept the case and agree to intervene. If the Attorney General declines to take over the case, it gets dismissed.
Healthcare Fraud and Whistleblower Lawsuits
A qui tam action can be brought against any company or individual that is fraudulently getting funds from the government. At Miller & Zois, however, our False Claims Act attorneys focus primarily on qui tam actions that expose fraud by healthcare facilities such as nursing homes. Nursing homes are subject to the FCA because they regularly receive large segments of their incoming revenue from Medicare and Medicaid reimbursement.
Any nursing home or healthcare provider that engages in fraudulent activity to increase the amount of Medicare reimbursement they receive can be subject to a qui tam action under the FCA. Medicare fraud is a major problem in the healthcare industry. It can occur in an infinite number of ways and it might cost the country as much as $400 billion a year. But the most common Medicare fraud schemes involve fraudulent billing. Medicare billing fraud occurs whenever a healthcare facility bills Medicare for reimbursement that they are not legally entitled to receive.
The most common type of billing fraud is known as “upcoding.” Upcoding occurs when the healthcare facility provides a service or treatment to a patient and then overcharges Medicare for that service by coding it as something more expensive. A common example would be performing a 15-minute medication consultation and then upcoding it to a 1-hour exam to get higher reimbursement from Medicare. Phantom billing is another common type of Medicare fraud. This occurs when the facility bills Medicare and gets reimbursement for patient services that were never actually provided.
Qui Tam FAQs
Who Qualifies to be a Whistleblower Plaintiff in a FCA Lawsuit?
To have standing as a whistleblower and bring a qui tam lawsuit, you must have direct personal knowledge of the alleged fraudulent activities. Direct knowledge means that you personally witnessed or were engaged in fraudulent actions. It cannot be based on 2nd hand knowledge that you heard from another person. The ideal whistleblower is a current or former employee of the company committing the fraud. However, qui tam plaintiffs do not have to be employees as long as they were in a position to acquire direct, first-hand knowledge of the fraud.
Do I Need Government Approval to File a False Claims Act Lawsuit?
No. Qui tam plaintiffs are not required to consult with the government or get permission from the government before filing a whistleblower lawsuit. The U.S. Justice Dept. may or may not decide to join and take the case over after you file it.
Is There a Statute of Limitations on Whistleblower Lawsuits?
A qui tam case must be filed within 6 years after the alleged fraud occurred, or three years after “the official of the United States charged with the responsibility to act in the circumstances” knew or should have known of the relevant facts.